Why Angela is Better Off at Allocation N
Angela's utility is higher at allocation N compared to her previous situation (allocation L), despite receiving the same wage of 23 bushels in both scenarios. The improvement in her well-being comes from having more free time at allocation N (19.5 hours) than at L (16 hours). Since she values both grain and free time, an increase in one while the other remains constant leads to a higher overall utility.
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Ch.5 The rules of the game: Who gets what and why - The Economy 2.0 Microeconomics @ CORE Econ
The Economy 2.0 Microeconomics @ CORE Econ
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Why Angela is Better Off at Allocation N
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Learn After
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